This is serious. Be sure to discuss it with your bankruptcy attorney. Yes, a trustee can dis-allow any applicable exemption due to your omitting this asset from your petition. Good luck.

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I had this exact same situation about 5 years ago. The trustee dis-allowed the $10,000 exemption and took all the money from the P/I case BECAUSE the debtor failed to list it or the exemption on his petition. That trustee is now a judge in this district.

The Trustee might object to the discharge, but that is unlikely. The case will be open until the PI case is resolved and the creditors paid from the net proceeds. Debtor amendments apply back to the time of filing. If the case was closed and debtor now tries to reopen that is a problem.

I have represented Trustees who have objected to, or moved to revoke, the discharge of debtors who intentionally omit significant assets, especially when it appears intentional. It is a huge problem when the defendants in the PI case can raise judicial estoppel as a defense, and we have had to settle for less than a case is worth. We have referred a couple to the US Attorney. Yes, it happens.

I guess you are asking if the trustee can do what he or she is doing & the answer of course will be decided by the judge.

The issue is why you did not list the personal injury case in your bankruptcy petition?

If it was an honest mistake, such as you had no intention of starting a law suit (assuming none had been started when you filed bankruptcy OR you thought the question in the Statement of Financial Affairs regarding law suits did not mean personal injury suits, whether because the case was not put into suit or you thought it meant collection law suits against you, you should be ok.

Amend the petition and list the PI case. If there was bad faith the Trustee would still have an objection. If you do not have a lawyer, get one.

Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

IF IF you did this bankruptcy without an attorney, you have provided everyone of yet another example of being penny-wise and pound-foolish. Yes, you should amend WITH an attorney! Amending is almost as complex as preparing the original petition. Good luck